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tv   Street Signs  CNBC  December 11, 2017 4:00am-5:00am EST

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berger: we'd really like to find people who get the potential and possibility of this collection as a singular museum like none other that's ever been created. now, that would be one exquisite exhibit. welcome to "street signs." i'm joe anna oversevenie and these are your head lines. bitcoin surged over 20% as they launched on the cboe, but trading is halted after the sharp price move. investors turn on the afterburners and send the stock higher after an order from qatar for typhoon fighter jets. case for dismissal hsbc shares rise as an agreement with the department of justice
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expires and the bank sees a dismissal of charges. and going higher, they do not expect to incur any losses good morning, everybody. it is december 11th, two weeks away from christmas and perhaps a snowy monday to be expected. let's take a look at how markets are doing this morning so, asian indices were firmer overnight with nikkei with another strong session up more than 5%. and of course, last week we also saw u.s. equities end the weej a smidgen higher new highs posted for dow jones, the 65th record close for 2017 the picture in europe looks a little bit firmer this morning, trading slightly above that flat line let's switch to indices. of course, this is a big week for indices. we've got lots of central bank
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meetings coming up, the fed, of course, but above and beyond that, we've got the bank of england, ecb, not really expected to do much this week in terms of decisions, but as you can see, the picture looks fairly safe for the italian index, ftse mib, which is struggling a little and down 0.1% let's look at how the sectors are doing this morning as well you can see up 5%, bank continuing to perform strongly after very strong week last week, up 0.5%. the laggard this morning, technology telecoms, again, in line with recent performance, struggling a little bit with some of the announcements that came out across the pond with regards to u.s. tax reform, but we'll get into that a little bit later. but one of our main stories today is about bitcoin the bitcoin futures have surged after launching on the cboe overnight, at one point jumping more than 20%. demand was high, prompting the cboe to warn the websites may be temporarily unavailable.
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it triggered short trading halts, in line with exchange rules during sharp price movements. users hope the launch will help legitimize the currency and attract larger institutional investors. the launch of futures may have sent the price higher, but bitcoin prices may vary depending on where they're traded dominic chu reports. >> reporter: there is no centralized trading or consolidated tape that tracks all of the transactions across all exchanges and posts them, unlike the stock market we deal with every day this past week, we saw coinbase show prices at record highs, above $19,000 per bitcoin. meanwhile, coindesk's average highs showed just above the $17,000 mark on that same day. coinbase's platform shoulders a lot of the volume for bitcoin trading. it's based in san francisco and is popular among many retail-oriented digital currency traders here in the united states prices of bitcoin on coinbase
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have been higher than other exchanges, at least in recent days another san francisco-based exchange is crackin, which is one of the bigger volume exchanges when it comes to trading in other kurnsiony like euros or canadian dollar and uk-based bitstamp trades not just bitcoin, but other cryptocurrencies like ripple, bitcoin cash, et cetera. a lot of these platforms trade different currencies each platform has its own, different nuances. and forget everything you've heard about a.m. ninonymity whet comes to trading bitcoin those that are most established will do something called kyc, or know your customer the accounts will in some ways need in many cases name information, address, bank information. some even want photo i.d.s and proof of residency they may even require tax identification numbers if you're doing a lot of trading so it's something to watch out for and remember to check and see what those differences are between all the different kinds
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and locations of bitcoin and other cryptocurrency exchanges for cnbc business news, i'm dominic chu. now, south korea's finance minister has said he is in talks with the relevant ministries on the regulation of bitcoin trading. the move comes as the cryptocurrency draws in a greater number of retail investors. the south korea prime minister recently warned that bitcoin could push young people into illegal activities now, ben gutter yij is joining me on the show good morning. >> good morning. >> on the subject of bitcoin, it feels as though the advent of the futures has facilitated participation from institutional investor sides as an investor, how are you thinking about not just bitcoin, but the cryptocurrency complex as a potential asset to investment in the future >> well, you're right, the futures exchange will legitimize it as an option for institutions, so we must work hard at understanding the fundamental drivers and how to value it, but at this stage, it's very difficult to get our
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models together that are going to determine what is the fair value of this particular cryptocurrency, bitcoin. so at that juncture, at this stage, you're really buying into the idea that there is to a degree a frenzy and that other people are going to buy it off you at a high price somewhere down the line. >> don't you think the actual technology of digital currencies is going to be with us clearly, there is an appetite for it there's been a lot of demand for bitcoin. some of it is on the back of speculative demand and speculation that the prices will continue to rise, but also people are seeing it as a storage of wealth value somehow. >> i think it is seen as another storer of wealth amongst this sort of period of extraordinary monetary policy, but at the same times, there are lots of regulatory uncertainties out there surrounding this currency, how it's going to be treated at a taxation level, which providers are going to accept it as a means of funding for a transaction. so you know, there is a lot that needs to be worked on.
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at this juncture, it's pretty clear from the price chart alone that buying into something speculative -- now, it doesn't mean it won't go any higher, but fundamental analysis isn't dominating the bitcoin price at the moment. >> one thing that does come up a lot and that will probably last with us is the technology that underpins it, the blockchain technology and what you're seeing is increasingly numbers of banks are introducing blockchain technology you're seeing different firms introduce it as a means of recording transactions in a ledger format and in a format that's essentially immutable when you think about blockchain as separate to bitcoin, is that not an area that you would look to invest in, given that numerous types of investors are beginning to look at it as something that's going to be with us for a very long time >> no, you're quite right. the technology is grounded in something really quite structural, and i'm sure that it will prevail, but the investment
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choices, need we necessarily go straight into the most talked about cryptocurrency at this juncture i mean, some of the banks would be able to harness some of this technology, of course. many of the tech companies that are already out there are going to be beneficiaries of the cryptocurrency proliferation and of course, many businesses themselves that will transact in the bitcoin will be beneficiaries. so, there are many ways to take advantage of technological improvements, and of course, the growing use of cryptocurrencies. the most speculative elements need not be the ones we encourage clients to pursue at this juncture. deutsche bank has warned bitcoin rates could pose a real risk to the broader market next year for more on that, head to now on friday, the u.s. added more jobs than expected in november with 228,000 extra people on the payroll. the unemployment rate stayed at 4.1%, holding at almost a
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17-year low. speaking to cnbc, white house economic adviser gary cohn said the trump administration is concerned about the lack of wage growth in the economy. >> it feels like a good number to us. we'll continue to grow jobs. if you look at what's going on in the manufacturing sector, that's a sector that you know president trump cares a lot about. we're at a 17-year low in manufacturing at 2. 6% unemployment we're continuing to drive people back into the labor force, but as you point out, we're still not growing wages in this country. we do believe that tax reform will help us drive real wage growth in the united states, which is something really important for the administration >> we're just not seeing that. >> no. >> wages up 2.5%, labor unit costs earlier in the week. when you talk about wage increases, over what time period and on top of that, when the president talks about growth going to 4, 5 or 6, is that something you think is in the
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universal of possible? >> we know american workers once this tax bill is passed, they'll start seeing their paychecks change early next year when the withholding tax charts change, so they'll see a change in withholding tax. then as the economy continues to grow and we bring more businesses back to america, we'll create more competition for labor, so we'll continue to see more wage growth over the next cycle, over the continuation of the next four or five years of this cycle so we think we are in for a long period of wage growth, starting the beginning of next year, which is something we haven't seen for the last eight or ten years, and that's really important to us. >> i wanted to follow up on something you just said. you just said big business will come back to america as a result of the tax cuts/reform i understand why we might stem the tide of those wanting to leave and the move to a territorial system as well, important there, but why do you think there's going to be any that actually come back? >> well, look, when you look at the competitiveness of america,
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we're not competitive today. we've got a 35% worldwide rate when you've got a 20% territorial rate and you're looking to invest capital, the first thing you look at when you're making a capital allocation decision is your after-tax rate of return we're now going to have an after-tax rate of return that competes with the rest of the world. it's going to make us competitive again. it's not just big business if you look at the nfib numbers this week, optimism in the small business, in the pass-through business, is at all-time record highs as well, so small businesses are hiring as well because they see the growth in the economy. >> right go ahead. >> to your point, we keep asking ceos, what would you do with the potential tax benefit. you were at a "wall street journal" conference where john busy asked ceos to raise their hand very few did we're getting buybacks from home depot and timo and bank of america. is that what it's going to look like >> i think we're going to see a combination of everything. i think you're going to see a lot of capital investment as
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well i was at a big meeting this weekend with a lot of business leaders from all size businesses, and they were all very excited about the opportunity to grow their businesses we're seeing a lot of applications for permits through the system to expand and build businesses look at what's going on in the l&g business, look at what's going on in some of the other businesses where you need government permitting. we've got a huge backlog of permits. when those permits get granted and this administration is really expediting that permitting process, we're going see enormous amount of capital and job creation in those areas. >> now, ben gutteridge is still with us. ben, going into this year, many people were positive on reflationry trades and many people expected this year, 2017, to be the year that inflation makes a comeback hasn't quite happened. do you think it will eventually happen do you think 2018 is going to be the year of reflationary trades? >> well, i think perhaps in the first half as we move into 2019, there's a lot of reason to think reflationary pressures can
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build. the labor markets are clearly tighter than where they were 12 months ago the dollar has been weak, so that should be inflationary, certainly, for the u.s and also, we have this tax hike that's seeming -- i'm sorry, the tax reform, tax cuts, that are seemingly going through as we move into the new year and with the global economy in decent shape, perhaps better than this time last year, these are good for growth and inflationary pressure, so we would see these inflationary pressures building, but there are reasons for caution. there's still secular and structural pressures, downward pressure on inflation, you know, robotics and lots of other demographic issues that have been long discussed. >> so, with that in mind, do you think next year will be a good year still for equities? i mean, we saw equities this year, like tesla, whatever happened, they kept going up would you still be looking at equities and thinking we get that much of an outperformance going into 2018? >> you're quite right, it's been a forgiving year this year, given what's been thrown at the markets. i think ultimately, equities should be rewarding in 2018.
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the global economy is in decent shape. but we're also moving from a period of central bank offering very easy policy to easy policy, so that is actually, you know, that is a tightening of policy, even though policy's not going to be tight, it's tightening, and we think that would inject more volatility into the equity markets. so we would expect 2018 to be rewarding for stock markets because the global economy is still in decent shape, but for volatility to pick up as central banks take away some of the punch bowl, if you like. >> can i ask you how you're thinking of fixed income here? again, 2017 was a year where everyone had the same view, that reflation would be back and that this would be the year where treasuries could finally sell off to 3%. we're still around 2.4%. we've been there for a very long time, almost unchanged relative to the beginning of the year it's been a tough trade to hold. what is your view on fixed income and also the corporate bond complex, because that's even more interesting, given how tight some of the valuations are in that spectrum as well
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>> well, i think you've been almost generous in the question. i think the market's been probably utterly dreadful at predicting where bond yields are going, and on that basis, given that the consensus thinks they're going higher as we move into 2018, we should probably par back those expectations. i think the core view is they move higher, but it would only be very modest there are some cyclical inflationary pressures, but really, given the deflationary pressures that prevail, as i said, robotics, perhaps labor force that isn't particularly confident enough to ask for wage increases, you know, the amazonian effect you know, we can find prices cheaper online and the technological advancements means i just don't think inflation expectations are really going to go anywhere out of reach, and so that should keep longer-term bond yields well compressed, and therefore, while it's not going to be a great return in fixed income markets, we do not see at all a case that it would be a blood bath in that area. >> reading through your notes, i see you're also optimistic on
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europe going into next year as well i think that's shared by many people looking at the markets. indeed, many forecasters have revised upwards of forecasts for europe next year, but how do you play it? >> well, that's a worry that everyone sort of thinks that, so that is a concern. we would almost sort of say it's a year of two halves we see going into 2018 the global economy in decent shape, but as those inflationary pressures come through, perhaps central banks take away a little bit of that interest rate generosi generosity, particularly in china, but some of these growth conditions may be less bountiful. and of course, europe is inextricably linked to merging market demand given its mercantilist nature. therefore, as we move into the middle to second half of the year, we would expect that european trade to come under a bit of pressure, but we're anticipa participating for now. >> ben, thank you. head of fund research at brewindolfin, ben gutteridge you can e-mail the show or tweet
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us, @streetsignscnbc or tweet me directly coming up, stocks rally and two companies work to gather the fallout from the retailing scandal. details after the break. ♪ the moment a fish is pulled out from the water, it's a race against time. and keeping it in the right conditions is the best way to get that fish to your plate safely. sometimes the product arrives and the cold chain has been interrupted, and we need to be able to identify where in the cold chain that occurred. we took our world class network and we developed devices to track environmental conditions. this device allows people to understand what's happening with the location, but also if it's too hot, if it's too cold, if it's been dropped...
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signs. hsbc shares are trading near the top of the stoxx 600 after the bank announced it's deferred prosecution agreements with the u.s. department of justice has expired. the move is set to enable the bank to repatriate the approximately $8 billion tied up in its u.s. subsidiariesubsidias investec has outlined its exposure to steinhoff, the retailer embroiled in an accounting scandal the manager said its exposure is small and it doesn't expect losses but warns shareholders that the maximum potential loss would cut up to 3% of posttax operating profit steinhoff says it's appointed a new board subcommittee to strengthen independent governance and that trading was
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continuing in the prechristmas period swatch shares are getting a boost. the swiss bank raised its rating on the watchmaker to outperform and increased its price target price to 460 swiss francs from 280 swiss francs and qatar has confirmed it will buy 24 typhoon fighter jets from bae systems it's valued at nearly $7 billion with delivery expected in late 2022 qatar last week also signed off on a purchase of $8 billion worth of fighter jets from france uk prime minister theresa may will make a statement to parliament later today where she will hail a new sense of optimism in brexit talks the statement will come after the eu commission president claims sufficient progress has been made in the negotiations. friday's agreement was a major boost to the prime minister, who has faced infighting amongst her cabinet. the prime minister's statement will come after a cabinet meeting later this morning
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and the uk will aim for a trade deal with the eu that would top canada's pact with the customs union, according to brexit secretary david davis, who described his preferred deal with the eu as canada plus, plus, plus speaking on the bbc, davis also out lines his desire to sign a deal shortly after the uk leaves the eu in 2019. >> the first thing is, we want an overarching free trade deal, which has no tariffs, all right? so you don't have to negotiate every tariff law it takes a long time secondly, we start in full alignment. we start in complete convergence. the odds, as it were, against a wto will drop dramatically. >> the british chambers of commerce has cut its economic outlook for the next two years the group expects inflation to continue rising over that period with lackluster wage growth. the cut in economic outlook comes as research for visas show uk consumers have cut down in spending on the run-up to
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christmas. the credit card company says this would see the first fall in christmas spending in over five years. ecb president mario draghi has made a point of saying he sees no bubbles in financial markets. however, draghi has pointed to one area where he sees stretch valuations prime commercial real estate cbre says the prospect of higher long-term interest rates will start to pose a challenge to european property prices neil blake of cbre is joining me this morning thank you for joining the show. >> good morning. >> draghi comments aside, it looks as though the european property market has done extremely well this year, despite some of the odds, but also in line with the cyclical recovery we've seen in the data. are you forecasting a similar outperformance going into 2018 >> the market has been exceptionally hot. we've seen prices driven higher. we've seen record volumes, particularly in continental europe, but don't forget, the european cycle is behind the u.s. cycle, probably behind the asian cycle, too, and investors are booked to europe
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so we'll have another good year next year. the only thing that will be constrained is things to buy it's kind of a fixed universe in commercial property. >> one of the highlights of your report, you said, is that of flexible offices i know there's going to be continued demand for that type of working space, fueled by start-ups, technology sector, et cetera how has that changed the composition of the property market of the last couple of years? >> i think you have to appreciate, property doesn't exist in a bubble. it's not sort of recycling the same thing all the time. there are technological and social trends. we've seen quite a few of those at the moment, one which you mentioned, flexible offices, co-working space people want shorter, more flexible spaces. i think it's the internet arriving in commercial property, allowing people to find new ways of allocating property very, very popular it's a relatively small part of the market, but it's growing rapidly and is bound to continue to grow. >> assuming that trades at a premium as well. >> it's a different kind of market, really certainly, the operators might get higher rents from a variety
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of occupiers it's all about managing the space. there will be new operators in the industry, but it's something that's going to spread everybody's going to get familiar with flexible working the next few years. >> can i ask you your view on the retail sector? clearly, there's been a lot of talk about bricks-and-mortar businesses and that they've been facing a lot of competition from online companies and e-commerce companies. what does that mean for the commercial property sector in that regard? >> that's the other aspect of technology catching up with property, really, but it's really sort of mixed effects some ends of the market are actually pretty resilient, you know, the prime end, the oxford street shops and new york street shops are actually still doing very well. the value end seems to be affected, but there's certainly a squeeze in the middle, companies having to react by having their own omni channel offers and things like that, but certainly you see differences in performances with them slipping in the middle possibly
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so not a uniform picture the other thing to bear in mind is that the boom sector in property in market actually the last couple years has been an industry, two halves of the same coin, and that's certainly going to continue through 2018 >> i want to ask you about the uk market in particular. and one of your previous notes, you said one of the biggest commercial properties in the europe for all of this year was in london, which sort of contradicts what you would expect, given some of the repercussions of brexit, but some of that was buoyed by the pound. assuming the currency stays stable and where it is now, how does that alter your outlook for uk property prices >> from the point of view of an investor, you have to think the pound will go up every five-year period, so it really doesn't change the view. property's still a good value. there could be things that lead to changes this year, but the fundamental strength -- there is uncertainty, but fundamental strength is still there and will always be in high demand. >> neil blake, global head of
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forecasting at cbre, thank you. coming up on the show, the alabama senate race is too close to call as voters prepare to go to the polls in the state tomorrow we'll look at the latest on the controversial campaign right after this break happy anniversary dinnedarlin'
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welcome back to "street signs. i'm joanna versechi and these are your headlines a big day for bitcoin. futures soar over 20% trading on the cboe, but trading is sharply halted after the priceings. boe investors turn on the afterburners and send the stock higher after an order from qatar for typhoon fighter jets. case for dismissal hsbc shares rise as an agreement with the u.s. department of justice xirdz and the bank seeks dismissal of the charges investec shares are higher after they say they do not expect to incur any losses from steinhoff.
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and good morning, again, everyone let's take a look at how u.s. futures are opening up this morning. of course, i should mention that the u.s. equities did end higher on friday following a decent jobs report, despite a slightly disappointing wage growth coming in at just 2.5%, but of course, overall both dow and s&p sought new record closes on friday and all eyes will be on the fed's meeting this week. as you can see, s&p 500 is seen to open about four points higher and dow jones seen opening up around 35 points higher. so again, another firm start switching to european markets, the picture here again is broadly positive. ftse 100 up 0.6% of course, some of that is on back of optimism following the agreement that was made for phase one of the brexit negotiations dax trading around that flat line but still slightly green. and cac also around that line.
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of course, ecb meeting's coming up later this week, not expected to move the needle that much, but again, european markets and european investors will be watching out for that later this week now, let's just take a look at how fx is doing this morning u.s. dollar ended up last week up 1.1% on tax reform development, so clearly, the picture is one of dollar strength, but this morning it's turned a little bit. you can see dollar/yen a tad weaker, down 0.1%, europe euro/dollar around the 118 level. almost touched 1.34 earlier in the day and the dollar/swissie around 0.99, so a tad lower. one of the main stories in the u.s. is the alabama senate race, which is too close to call as voters prepare to go to the polls in the state tomorrow. president trump has tried to give republican candidate roy moore a campaign push, calling the democrat candidate "a
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puppet." nbc's tracie potts joins us live from washington. and tracie, it appears as though the race has become somewhat less about the individual contestants and more about a referendum on trump's policies himself. what's your view on that >> reporter: well, certainly to some degree. i mean, we've seen the president get involved, going to florida just a few days ago, in part campaigning for moore. we've seen him now making these robocalls, phone calls to people in alabama, saying that he can't get his make america great again agenda done without roy moore's vote, but there are a couple of big issues here and a reason why we're watching this one race in alabama. first of all, roy moore has been accused by nine women of sexual misconduct he's flatly denied those allegations, including one with a woman who says she was 14 years old at the time. he says it's all politically
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motivated, and he is going to win this race. in fact, the latest polls that we've seen, the last three or four i was looking at just this morning do show them trending toward roy moore, but the democrats are really fighting for this seat. their candidate, doug jones, if he wins, would allow them to pick up one seat here, just slightly tilting the balance of power, not completely to democrats, but certainly giving them a little bit more of an edge here. the big issue, of course, has been these misconduct allegations amid a number of different allegations happening here on capitol hill, but the challenge that lawmakers have is, if the people of alabama, with full knowledge of these allegations, send him to washington as their representative, do the lawmakers here really have aright to sen him back and that's something that they're considering. while he's got support in alabama, from the president, from the republican party, a lot of republicans here on capitol hill have said they believe the accusers, and if he's elected, they want to see an immediate ethics investigation
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>> thanks very much for that that's very interesting going into tomorrow's key election, i should say now, u.s. ambassador says the ambassador of the u.n., nikki haley, says women who have accused donald trump of sexual misconduct should "be heard. her comments break with the trump administration's stance that any allegations against the president are false and come amid a growing wave of women reporting abuse or misconduct against powerful men more than ten women have accused the president of misconduct before he was in office. now, nbc's megyn kelly will speak exclusively to three women who have publicly accused the president later today. those interviews air on msnbc at 9:00 a.m. eastern and 15 pm cet. palestinian president mahmoud abbas will not meet with u.s. vice president mike pence when he visits the region next month. his decision comes as violence flairs between israel and palestine following donald trump's decision to recognize jerusalem as the capital of
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israel the white house said sunday it's "unfortunate" abbas has declined the ming. the u.n.'s middle east envoy has warned the risk of a conflict could escalate. nbc's bill neely reports from the middle of protests right in jerusalem. >> reporter: israel's response to palestinian rage, volleys of choking tear gas to stop protesters furious at president trump after his decision to recognize jerusalem as israel's capital. riot police on horseback confronting palestinians so far, these skirmishes don't amount to much the question is, will they gather momentum? are palestinians prepared for a long campaign of protests? funerals today for two hamas militants killed by israeli warplanes that hit weapons factories. the air strikes coming just hours after rockets were fired into israel.
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palestinian president mahmoud abbas is directing his anger at the u.s. he'll snub vice president mike pence when he visits this month. >> they have no mandate to give away jerusalem to an occupying power. >> reporter: but street violence and global pressure are unlikely to change president trump's mind bill neely, nbc news, jerusalem. the implementation of president trump's recognition of jerusalem as israel capital will not be easy. that's according to turkish president erdogan who said the decision does not comply with international law, diplomacy or humanity erdogan has organized a meeting of the organization of islamic cooperation in turkey on december 13 to coordinate a response to the decision saudi arabia has said it will allow cinemas in the kingdom for next year. it comes as the country follows its vision 2030 plan set out by the crown prince mohammed bin
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salman they hope to have over 300 cinemawise over 2,000 screens by 2030 secretly, i'm hoping they're going to show "wonder woman. venezuelan socialist party has claimed victory in the country's nationwide mayoral elections, claiming it has won 90% of the 335 mayorships. the elections were boycotted by the three main opposition parties. the victory boosts president nicolas maduro ahead of expected presidential elections next year now, our next guest says that despite solid fundamentals, next year could be tough for emerging markets david honer joins us from the head of press asset strategy and economics at bofa maryland thank you for joining us this morning. >> good morning. >> going into next year, it's been a spectacular year for emerging markets 2017. msci is up 18%, 20% or so. what makes you more cautious going into next year >> well, we think we have had really two years of one-way street for emerging markets, and now when i talk to clients,
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everybody already expects 2018 to be another great year now frankly, fundamentals are still pretty good and in equities, we expect 20% earnings growth, so we're not saying that 2018 will be terrible, but we have to prefecture for some bumps, because everybody expects it to be great so chances are, we'll have some risk to that one risk is clearly that the dollar rallies we think that in q-1, we could see euro/dollar at 1.10, and that's quite a bold call, but we think that's because we have lots of offshore profits that actually want to get home to the u.s. on the back of the u.s. tax reform second is china, where at this stage, no one's used to worry about everything, which is interesting, given that only two years ago people were very concerned about financial stability there. so we think that some return of financial stability concerns there are quite possible and then a third thing is that we have a backdrop of rising interest rates so far, emerging markets are very immune to this because
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rates volatility globally was extremely low, so carriage rates have done very well, but chances are that late in the cycle, given that oil prices are quite high, wage growth in the u.s. is pushing up, we'll actually get more rate volatility, which normally weighs on the yen. >> i was going to ask you about that and the impact that u.s. yields are having on the em complex here and actually, the way it's panned out is that it seems to have more of a pull for external debt than it has for local debt. and what you've seen recently is that external debt continues to do well and is pulled towards global fixed income, but you're beginning to see weakness in local debt what is the wedge between the two telling you? >> well, i think what it's telling us is really that people have crowded a lot into high-yielding local debt markets like brazil, like turkey, for example, which are very attractive in terms of the yield, but they have lots and lots of domestic policy challenges, and they're very vulnerable to a rise inthe u.s dollar
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so, we have seen quite a bit of shakeout in these markets already in the last two months as people got more bullish on u.s. tax reform, and we think that these risks could continue to weigh on these markets into early next year. >> so, which are some of the markets you're turning a little bit more cautious, then? you say the risks will continue to weigh what are some countries you're looking at and saying the dynamics are not very positive going forwards >> well, we think of some of the favorites like the mexican peso are going to be under pressure, partly because the nafta negotiations don't make any progress, in our opinion, and we have elections there middle of next year. the market could get quite scared if we don't have enough to resolve ahead of the mexican elections. another market we are more cautious on is africa. into later next year we think the market is a bit too bearish on the outcome of the key decision on the leadership of the governing party there, which takes place this week. >> that's this week.
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>> exactly but the market is very split we think the chances that we could see a tactical rally in the rand but over the course of next year, we think that we'll see renewed weakness in the currency as the challenges on policy there are absolutely humongous but we are more positive on currencies in some of the lower-yielding, more developed emerging markets like korea, for example, or poland, because these are countries that have really had very, very low rates for a long time. now they are starting to see the emergence of some inflation pressure and we think we'll see some good rate hikes in these countries, meaning central banks are reacting to very strong economies like the dollar benefited from this in the last few years. we think countries' currencies, like korea and poland can benefit from those in 2018. >> can i ask more about korea? because clearly, the whole world is watching that, and geopolitical risk comes to mind. what is the trade there? how do you hedge against a potential nuclear threat, if it does come to happen?
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>> well, you know, i mean, an event like this is almost unhedgeable. and the tempt of the market to short korea on the back of geopolitical risks haven't really worked out because the economy's too strong at the end of the day, that has been dominating the currency market on balance, if you are going to try to hedge such a massive risk, it's probably best to find low volatility equity or currency markets in asia for example, the taiwan dollar, the taiwan equity market, or indeed, also, the hong kong dollar, which of course, is a peg, but could come under pressure on the major geopolitical risks in the region. >> brilliant thank you so much, david david houner, from bofa merrill lynch. join in the conversation you can e-mail
4:44 am or follow us on twitt twitter @streetsignscnbc or tweet me @cnbcjou. coming up, uber's appeal we are at magistrate court as they fight to keep its london license. we'll be right back. my name is jeff sheldon, and i'm the founder of ugmonk. before shipstation it was crazy, like... it's great when you see a hundred orders come in, but then you realize i've got a hundred orders i have to ship out. shipstation streamlined that whole process. the order data, the weights of the items, everything is seamlessly put into shipstation, so when we print the shipping label everything's pretty much done. it's so much easier so now we're ready, bring on the orders. shipstation. the number one choice of online sellers. go to and get two months free. my friend susie cracks and hello sensitive bladder. ring a bell? then you have to try always discreet.
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welcome back to the show china's ehang is testing an electricity-powered drone capable of carrying human passengers we spoke with the co-founder, derrick xiong, who says they could be profitable within two years. >> we started with the camera drones, but this year we shift from the consumer level to the application about drones so, what can we do with those drones, right? it's definitely not limited to just having aerial footage or photography, right so, other than this ehang before we carry a passenger, a human being, we also do things like we
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are transporting drugs like organs we also help government to build up a smart city fractures. for example, we develop the very first command control center for drones in guangzhou. we also build this command control center in guangdong province. >> the performance drones were very impressive. are these performance drones mainly being done in china and i'm asking that because i'm thinking, you know, if there was any wind out there, you really could have quite a big problem on your hands. i'm not sure whether or not the regulations in other countries would allow that. >> right first of all, technically, i think our whole solution is getting really mature, beside all kind of weather conditions i think those are definitely can. so in terms of regulation, the main barrier is, you know, still like i think the government or the local aviation association,
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they need to really, you know, have an idea about what is this, because in china, we fly, you know, around, mostly all the major cities in china, beijing, shenzhen, all parts of china because china governments is getting really familiar with our technology and they trust us that it's a safe, and we also make sure that we notify them -- >> just racing into so many different areas and trying to expand the application use for drones, that seems very exciting on the other hand, it also seems as though there's a lot of investment involved. so, what's the path to profitability? >> the path to profitability i think -- okay, so, now today i think the whole drone industry is still in its early stage, right? so we all experience this, you know, kind of like back in 2014-'15, a lot of investment in drones then back to '16, a lot of company died a lot of drone companies died last year. so this year that's why we start to kind of explore deeper, okay,
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not only on a surface level, not only just do the camera drone. i think the long term, there's a huge market for the commercial drones so when i say commercial, in the broader sense, this not only means that we help cities to build up smart city command control centers or doing performing drones, not just about, you know, like human passenger carrying drones, but you can do a lot of like a shipping, logistic, you know there are so many things that people can use so okay, to give you an answer, i think it's still going to take some year, you know. it depends how you want to manage the balance between your r&d power and your business department. >> so, when do you think you'll be profitable? what's your target >> next two years, for sure. >> do you think it's achievable? >> i mean, it's definitely achievable it's mostly, you know -- so, we are focusing so much on the ehang orum, which is, this product is so unique that we
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need to put a lot of money in it and need to put a lot of engineers, human power in it, and we do not make a single profit from that part yet, but all the other product lines are making a profit. bitcoin futures have surged after launching on the cboe overnight. at one point jumping more than 20%. demand was high, prompting the cboe to warn the website may be temporarily unavailable. the sharp moves triggered a number of short trading halts in line with exchange rules during sharp price movements. users of the cryptocurrency hope that the futures launch will help to legitimize digital currencies and attract larger institutional investors. now, one of the main stories in london today, uber is fighting for survival in london the u.s. ride-hailing app is appealing for transport for london's decision not to grant it a new private hire license to operate in the capital arjun joins us from the westminster magistrates courts arjun, apparently today we're not going to get a decision on
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whether or not uber gets to keep their license, operate in london, but rather, we should get a timeline for how long the appeal is going to last for. if that's the case, what exactly are the tfl demanding out of uber >> reporter: when they failed to revoke the license, it could actually -- uber, they announced a number of reasons. one of the reasons is because they felt uber wasn't carrying out background checks on the drivers totally and another reason was they said uber was failing to report criminal activity from its driver to the correct authorities. so a lot of it is around the way that uber recruits drivers and allows drivers on its platform so, over the next few months, expect to see continued negotiations between uber and tsl and maybe making concessions and improvements on the tway onboards drivers a lot of it was around the protections of passengers. expect more announcements made by uber about ways to improve
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that that really was the main concern. but of course, this is something that will go on for a few months yet. we will understand the timeline for this and when we might get a final decision, hopefully, today, we will understand when that might come. but in that time, uber can continue to operate in the capital and they will be continuing to negotiate. >> and arjun, let me ask you this, last month they lost an appeal to the employment tribunal where we're told that they have to treat drivers essentially as workers, rather than self-employed contractors how is that discussion going to pan into today's discussion about the appeal process >> yeah, well, that's a separate issue, but in fact, it could be even more difficult for them, because if it turns out that uber loses the final appeal on the classification of its workers, it could mean that it has to give its workers extra benefits, which might include things like holiday pay, and that could boost its operational costs in london, and therefore, hit bottom in one of its biggest
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markets. so that's a big issue for them but another issue which i think investment in this company as well as users of this company to look out for is a big ruling from the european court of justice next week, and that's all around whether uber purely has a technology platform that connects the drivers to the riders or, in fact, whether uber is a transportation company, much like a traditional taxi company in operation today across europe. now, if it is deemed to be a traditional transport company, that could mean that it has to abide by many different rules across the many different markets here in europe and again, that could mean dkd -- [ sirens ] that could boost operation across the company, which could mean big trouble for uber. >> one final quick question, arjun. over the weekend, sheffield also banned ubers from operating in the city do you think the announcement in london will also have an impact on the sheffield announcement, should uber eventually comply with some of the tfl's demands
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>> yeah, i think you'll see that as well, depending on the outcome of the london announcement that could have an impact not only on sheffield, but if other cities, for example, manchester and other large cities in the uk follow suit with what london has done, that could definitely have an impact on uber across the uk. >> brilliant thanks very much, arjun kharpal. essential health and providence st. joseph are in talks to create the largest hospital operator in the united states the catholic non-profit hospital groups are discussing a deal worth $44 billion. it would combine 191 hospitals in 27 states, overtaking hca health care as the biggest company in the sector. ggp has rejected a buyout offer from its largest shareholder, brookfield property ggp is one of the largest owners and managers of malls in the united states and was offered nearly $15 billion by brookfield talks are ongoing. and if successful, it would create one of the world's largest listed property firms. now, just before we head
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out, let's take one last look at how u.s. futures are looking this morning as you can see, the market is pointing to slightly stronger open s&p up around four points, dow jones up 32 points or so, nasdaq up three points. of course, all eyes will be on that all-important fed decision coming later in the week, and the interest rate hike is more than 95% priced in there, but that's it for today's show i'm joanna versecchi "worldwide exchange" is up next. stay with us ♪
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rally on wall street kicks off a new week with the dow and s&p 500 sitting at all-time highs snp and going live, bitcoin futures surging in their highly anticipated debut we're digging in on the crypt yo currency's latest bounce. and burning unchecked. new evacuations ordered in southern california as a string of wildfires grows in size it's monday, december 11th, 2017 "worldwide exchange" begins right now. good morning and a very warm welcome to "worldwide exchange" on cnbc. i'm wilfred frost. >>


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